How do I consolidate my debt?

Howard asks: I want to consolidate my debt and apply for a home loan, how do I go about it?

Maya replies: Debt consolidation is usually done when you already own a home and you can use some of the equity — the difference between the value of the house and the outstanding mortgage — to increase your mortgage and settle your other debts.

If you are looking to apply for a home loan on a new property you will have to be able to put down a deposit of at least 10%. This means that rather than consolidating your debt you would actually have to find additional money.

Your affordability for the home loan will also be impacted if you have outstanding short-term debt.

It may make more sense to speak to your bank about a single loan that you can use to settle your other short-term debt and then pay off that single loan, hopefully at a lower interest rate.

Aim to settle that debt as quickly as possible. In doing so, you will be debt-free and will have proven to the bank that you can manage your finances. This will put you in a strong position for when you apply for your home loan.

Read more news, blogs, tips and Q&As in our Smart Money section. Post questions on the site for independent and researched information

Keep the powerful accountable

Subscribe for R30/mth for the first three months. Cancel anytime.

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.

Maya Fisher French
Guest Author

Related stories


Already a subscriber? Sign in here


Latest stories

Five-year drama over Sassa cleaning deal

Welfare agency allegedly bent procurement process to suit a contractor previously found guilty of collusion, and preferred bidder Corporate Cleaning wants damages paid

Sars whistleblower Van Loggerenberg suffers ‘suspicious’ home invasion

The break-in comes a week after that at the home of fellow whistleblower and Zondo commission witness Themba Maseko

Zuma takes another legal tilt at Zondo

The former president is asking the Pretoria high court to declare Zondo’s tenure as chairman of the commission of inquiry unlawful and to order Ramaphosa to appoint a new chair

Transport ministry to appeal Aarto Act driver demerit system ruling

Minister Fikile Mbalula says motorists’ behaviour will change with disincentives for ‘unbecoming conduct’, but Outa and AA say the legislation was carelessly drafted

press releases

Loading latest Press Releases…